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Wednesday, April 15, 2015

QQQ Credit Put Spread (wide vertical)

4/2/2015 (10:54:31 am, PT)  FP

- 4 May 2015  $102 puts at $1.27 (credit)
+ 4 May 2015  $85 puts at $0.05 (debit) (cheap "insurance")
  • Net credit:  $1.22 x 4 x 100 =  $488
  • Maintenance required:  $6800
  • Prob. ITM for $102 put:  32%
Why did I place this trade?
  • oversold region of stochastics (see chart)
  • "triple bottom" (possible support?)


4/15/2015 (10:47:09 am, PT)

  • buy to close the 4 short puts ($102 strike) at $0.39 (debit)
  • leave open the 4 long puts ($85 strike) in case QQQ drops between 4/15 and May expiration

Why did I place this trade?
  • overbought region of stochastics (see chart)
  • TAKE PROFITS!


5/15/2015 (expiration)
QQQ closed at $109.58, so the 4 long puts ($85 strike) expired worthless (as expected)


NET PROFIT:  $322.68
ROC = 4.745% (in 13 days)



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